GrainCorp winnowed as AWB favours Agrium

GrainCorp
has walked away from plans to merge with
AWB
after the wheat exporter’s board withdrew its support for the proposal in favour of a $1.2 billion cash bid from Canada’s Agrium.

GrainCorp was given notice on Friday that AWB intended to back the Agrium offer and had three days to present a better offer under the terms of its merger.

GrainCorp, which is eastern Australia’s biggest grains handler, said yesterday it had received formal ­notice that AWB would terminate its merger implementation deed with the grains handler, dashing hopes by GrainCorp chief executive
Alison Watkins
to create Australia’s largest agricultural company with revenues of about $7 billion.

But GrainCorp could re-enter the fray at a later date, with Agrium considering partnering with a third-party to manage AWB’s commodities trading business. It’s understood GrainCorp was attracted to the commodities business rather than AWB’s Landmark rural services business.

On the other hand, Agrium, one of the world’s biggest fertiliser companies, does not operate a grains trading business and is keen to buy AWB to gain access to the company’s ­extensive Landmark rural services network.

GrainCorp would not be the only interested party in the grains operations. Speculation has also centred on Agrium selling the business to traders, including Glencore Grain or Gavilon, which had been in discussion to buy part of AWB’s business until July.

AWB said the Agrium agreement allowed it to pay a dividend of 20¢ per share fully franked, subject to a ­favourable Tax Office ruling.